Starting an equipment rental business

[xr4ticlone]

1. Go work for a rental company for a minimum of 2 years before you start anything.
2. Non-competes have teeth IN SOME STATES. Sunbelt and most are 1 year / 75 miles from your location.
3. Sunbelt, United & others are not rental companies. Sure they rent equipment...BUT they are FINANCE & INSURANCE companies. That's where they make their money.
-They buy 500+ at a time. Their pricing is staggering compared to what you or I get. They pay CASH.
-They are self insured. The average Ins company pays 20-30% of their take in advertising, sales, marketing, and collections. These large rental companies pay $0 for that. Huge profit area for them.
-They're not out to bust anyone per say...but if their utilization rates are down...they WILL whore rates.

I've worked for Sunbelt. Not a bad group. But they're not equipment focused. "Give us something decent & cheap! We're going to paint it green and rent it! When we're done will dump it at Ritchie". They can work over vendors for support. They do so much of their business on the national level. Companies that travel all over & rent everything. You can't get that biz as a small rental store.

Capital is king in the rental world. **** is getting stupid on rates. Had a dealer tell me today that they're willing to go $3800 on a new 210 for monthly rate to crank up their 'market share' in San Antonio / Austin. That's asinine. BUT these fools got tens of millions in old money, everything is paid for in their fleet. It's a stupid decision...and you'll be competing with these types of people.

Was told about a 12 month job that they've got rental rates on the following...
4x4 extendahoe $1500 monthly
185 size skid $1200 monthly
4x4 backhoe WITH hammer $2000 total
210 WITH hammer $5000

That's just asinine.

Everyone wants to get into rental right now. I'm a contrarian...and firm believer when everyone wants in it's time to get out.

IF you're bound and determined to get in as an owner right off the bat...here is my suggestion. BUY a small rental company with a retiring owner. Work there for a minimum of 12 months before signing any purchase agreement. Go tell them you want to reinvigorate their business and buy them out when they retire.

A. Easier to finance a biz with a track record.
B. You already know market validity of the biz.
C. You already know what profit / income expectations should be as owner.
D. You get a book of biz & an established location / name / following - the hardest things to build.
E. You can see what it's like to run a single location store...vs working with unlimited resources of a Sunbelt or United.
F. You get a mentor / seller that can jump start your knowledge base in running THAT type of biz.

Good luck.

But honestly, the equipment rental & sales market isn't much fun anymore. It's a highly competitive, low margin, beat down. I don't see that changing any time soon...and I wish I could say this was just my thoughts...but I'm hearing this a lot from other sales / rental managers & sales reps.

 

[Brute_200]

1. Go work for a rental company for a minimum of 2 years before you start anything.
2. Non-competes have teeth IN SOME STATES. Sunbelt and most are 1 year / 75 miles from your location.
3. Sunbelt, United & others are not rental companies. Sure they rent equipment...BUT they are FINANCE & INSURANCE companies. That's where they make their money.
-They buy 500+ at a time. Their pricing is staggering compared to what you or I get. They pay CASH.
-They are self insured. The average Ins company pays 20-30% of their take in advertising, sales, marketing, and collections. These large rental companies pay $0 for that. Huge profit area for them.
-They're not out to bust anyone per say...but if their utilization rates are down...they WILL whore rates.

I've worked for Sunbelt. Not a bad group. But they're not equipment focused. "Give us something decent & cheap! We're going to paint it green and rent it! When we're done will dump it at Ritchie". They can work over vendors for support. They do so much of their business on the national level. Companies that travel all over & rent everything. You can't get that biz as a small rental store.

Capital is king in the rental world. **** is getting stupid on rates. Had a dealer tell me today that they're willing to go $3800 on a new 210 for monthly rate to crank up their 'market share' in San Antonio / Austin. That's asinine. BUT these fools got tens of millions in old money, everything is paid for in their fleet. It's a stupid decision...and you'll be competing with these types of people.

Was told about a 12 month job that they've got rental rates on the following...
4x4 extendahoe $1500 monthly
185 size skid $1200 monthly
4x4 backhoe WITH hammer $2000 total
210 WITH hammer $5000

That's just asinine.

Everyone wants to get into rental right now. I'm a contrarian...and firm believer when everyone wants in it's time to get out.

IF you're bound and determined to get in as an owner right off the bat...here is my suggestion. BUY a small rental company with a retiring owner. Work there for a minimum of 12 months before signing any purchase agreement. Go tell them you want to reinvigorate their business and buy them out when they retire.

A. Easier to finance a biz with a track record.
B. You already know market validity of the biz.
C. You already know what profit / income expectations should be as owner.
D. You get a book of biz & an established location / name / following - the hardest things to build.
E. You can see what it's like to run a single location store...vs working with unlimited resources of a Sunbelt or United.
F. You get a mentor / seller that can jump start your knowledge base in running THAT type of biz.

Good luck.

But honestly, the equipment rental & sales market isn't much fun anymore. It's a highly competitive, low margin, beat down. I don't see that changing any time soon...and I wish I could say this was just my thoughts...but I'm hearing this a lot from other sales / rental managers & sales reps.

Some solid points man. I think it's time to shift my direction towards another field in the industry. I would still like to run my own show one day in the future, just not quite sure what that might be.

 

[xr4ticlone]

I'd look at custom housing...get into a retirement market & build higher end stuff. Be hands on, do one or two at a time. Charge a premium.

And I don't want to sound like an angry old a-hole...BUT...here I go...

College doesn't teach you **** for the most part (I have a 4 year degree...and I'm pro education).
You've got a lot of enthusiasm, which is great. But until you're knee deep in the **** it's easy to be excited. : )
Enthusiasm can also get you neck deep in debt and trouble. ; ) You can learn more from working at a successful business, than college will ever teach you. The old teaching saying "those who can do...." isn't wrong.

My rule for starting a business....

Don't start a business you don't think you can get rich at (unless you don't care about money and just love the biz that much and are happy being broke) because IF...

You think you'll make a fortune....you'll make pretty good money
You think you'll make pretty good money...you'll probably do ok
You think you'll do ok financially...you're probably in for a struggle
Anything less and you just as well go to Vegas and enjoy loosing everything vs working your ass off to do it. : )

Those are my simple rules for starting a business. Because I've NEVER accounted for all the problems, taxes, fees, costs, overhead, and delays of any business I've owned or explored.

Also...start reading sales books. Because REGARDLESS of the business you own, you'll be SELLING SOMETHING. Read on negotiation as well.

From talking to biz owners daily, I can tell you part of it is management, but successful ones know how to do sales & marketing, and they know the value they bring and what they should charge for that value. I've got some of the hardest working guys making the least...because they're not working the RIGHT market / job. They've worried too much about being busy...not enough about making money. Busy =/= Profitable

I can also assure you that you'll have to work harder and longer for yourself than any job you take.

Find mentors, find people to do things for you...lawyer, banker, accountant, HR help (if employees), Insurance guy, suppliers. All of them should be trusted BUT highly vetted and researched. If you followed my first rules (don't get into biz with idea of low profits) you'll have money to pay for these things. You can make more money...you cannot make more time. So don't tie yourself up doing things that you could pay someone else to do faster and cheaper. You will burn out. You need to recharge your batteries as well. (I did this in my first sales job...got to the point of depression / hate of the job because I never took off time. After I quit and took the 2 weeks between jobs for a vacation I actually regretted quitting that job. I didn't hate it...I was just burnt out) So Work hard / Relax hard)

Finally...Never forget...
Time = Money
INVEST ACCORDINGLY

Good luck! You're clearly a go getter...and that's 98% of the battle.

 

[DARO]

Self insured finance company is what best fits the bill for the big dogs. There is a smaller market to rent to if you have the money to back it. Small ( less then 5 employees) do the rent to own quite often glady paying the 20 plus percent interest. On a 50 to 60 thousand doller mechine.